Karnataka HC Remands Engineering Firm’s GST Dispute To Different Officer After Auditor Also Adjudicated, Subject To 10% Of Tax Demand

The petitioner, a GST-registered proprietorship, was audited for the 2017–18 tax period under Section 65 of the GST Act.

The same Commercial Tax Officer who conducted the audit issued the audit report, subsequent tax intimations and show-cause notice, and passed the adjudication order under Section 73 on 31 December 2023, demanding tax, interest and penalty.

The petitioner alleged that its replies and supporting materials had not been properly considered.

Its appeal under Section 107 was dismissed for failure to make the statutory 10% pre-deposit.

The petitioner challenged the appellate and original orders, along with the preceding audit and tax notices.

It did not press its challenges to the Central and Karnataka notifications concerning extension of limitation.

The Court considered the audit framework under Section 65, the tax-determination process under Section 73—including the intimation of ascertained tax under Section 73(5)—and the appeal provision under Section 107 of the GST Act.

It followed the coordinate-bench decision in W.P. No. 103328 of 2026, which held that an officer who initiated and conducted the audit could not thereafter issue the notice and adjudicate the matter, and directed fresh consideration by a different proper officer.

The Court also relied on the coordinate-bench approach in W.P. No. 104956 of 2026, which remanded a comparable dispute while leaving the petitioner’s contentions open.

The Court treated the case as materially similar to the coordinate-bench decisions because the second respondent had conducted the audit and also passed the original adjudication order.

Although the petitioner had participated in the proceedings, it maintained that its replies and documents were not properly considered.

The Court concluded that the matter should receive fresh consideration by a different proper officer, with the petitioner’s contentions—including those concerning the audit report—left open.

It did not decide the merits of the tax demand.

The Joint Commissioner of Commercial Taxes was directed to assign it to a proper officer other than the second respondent.

All contentions were left open, subject to the petitioner depositing 10% of the tax demanded before the officer to whom the matter is assigned.

The operative order identifies the relevant DRC-01 as dated 30 September 2020, although the preceding account of the proceedings identifies the DRC-01 as dated 30 September 2023.

The challenges to the two notifications were not pressed and were not decided.